MLPX vs AMLP: Lower Fees Beat High Yield in MLP ETFs

Investors choosing between two popular energy infrastructure ETFs face a clear trade-off. The Alerian MLP ETF (AMLP) offers a trailing yield of 7.3%, among the highest in the income space. The Global X MLP & Energy Infrastructure ETF (MLPX) yields 4.1% but charges a fraction of the expenses and avoids a structural tax drag that has eaten into AMLP's returns over time.

AMLP holds 14 positions concentrated in midstream energy. Its top allocations include Sunoco at 13.25%, Plains All American Pipeline at 12.49%, and Western Midstream Partners at 12.24%. The fund carries $12.8 billion in assets and an expense ratio of 1.01%. MLPX, with $3.6 billion and 29 holdings, spreads exposure more broadly. Its largest stakes are TC Energy at 9.10%, Enbridge at 8.98%, and Williams Companies at 8.31%. The expense ratio is 0.45%.

The headline yield gap is real. AMLP paid $4.02 per share over the trailing 12 months, which on a recent price near $54.83 works out to 7.3%. MLPX paid $3.04 per share, about 4.1% on its $74.85 price. But the yield is not the whole story.

AMLP is structured as a C-corporation. The fund itself pays corporate taxes on gains before distributing income to shareholders. That tax drag, combined with the higher expense ratio, has eroded total returns year after year. Over the past decade, MLPX has returned more than double what AMLP delivered, according to fund performance data. The two funds invest in the same pipelines and storage terminals, so the gap comes down to structure and costs.

MLPX avoids the corporate tax problem by limiting direct MLP exposure in a way that keeps the fund from being taxed as a C-corp. It charges less than half the expense ratio and has produced superior total returns over every long-term horizon measured.

For income-focused investors in taxable accounts, AMLP's higher distribution is attractive on the surface. But holding it inside a tax-advantaged account like an IRA is a mistake: the internal tax drag permanently reduces the benefit of tax-sheltered compounding. For most long-term investors, regardless of account type, MLPX's lower fees and tax-efficient structure make it the stronger choice on total return.

Williams Companies and Enbridge, two of MLPX's largest holdings, carry Alpha Scores of 51 and 58 respectively, indicating moderate outlooks. Both stocks are tied to North American natural gas and oil pipeline demand, which faces steady growth from power generation and LNG exports.

The choice between these two ETFs comes down to whether immediate cash flow or long-term compounding matters more. The data over the past 10 years suggests the lower-cost option has won decisively.